- The Washington Times - Thursday, December 11, 2008

“Money! Money! Money! … I want money so much that I would do almost anything for some.”

These comments were written by the paymaster general of the American Army during the Revolutionary War, John Pierce. Having received no money for his department for six months, he warned that without funds, military operations “may entirely cease.”

If these were the times that tried men’s souls, as Thomas Paine wrote, it was also the wretched epoch that obliterated hope. Emptiness permeated the Treasury, want shadowed the soldiers, and desperation snuffed out any flicker of success. There was no money. Letter after letter said so.

George Washington wrote in 1775: “If the evil is not immediately remedied … the Army must absolutely break up.” The next year: “I think the game is pretty near up.” In 1778: Without more money the army would “starve, dissolve or disperse.” In 1779: “A dissolution of the Army … is unavoidable.” In 1780: “If our condition should not undergo a very speedy … change … it will be difficult to point out all the consequences.”

In 1781: “The aggravated calamities and distresses … are beyond description,” and without “a foreign loan, our present force … cannot be kept together.” In perhaps a moment of resignation, Washington wondered: “But why need I run into the detail … we are at the end of our tether … now or never our deliverance must come.”

Paine claimed that even if the Army had the necessary provisions, it didn’t have the money to transport them. Benjamin Franklin knew, as people wondered, why soldiers in Boston had not fired their cannons: “We could not afford it.” (Franklin was not joking when he suggested that soldiers be supplied with bows and arrows.)

Gen. Nathanael Greene lamented the dire situation: “We have lived upon expedients till we can live no longer.” James Madison was shocked to find in 1780 “the public treasury empty, public credit exhausted,” and one historian noted that at one point in 1782, “there was not a single dollar in the treasury.”

A Board of Treasury originally handled the government’s finances but proved ineffective. In June 1781, Robert Morris, named superintendent of finances, took over. Along with the money shortage, he faced the confusion of multiple coins and paper currencies, which made for easy counterfeiting and fraud.

A British officer observed that New York money was no good in New Jersey, New Jersey money no good in Pennsylvania, “and so on.” Each state “entertained little opinion as to the value of their neighbor’s money.”

In addition, as one writer put it, there were: “Ninepences and fourpence-ha’-pennies, there were bits and half bits, pistareens, picayunes, and fips. Of gold pieces there were the johannes, or joe, the doubloon, the moidore, and pistole, with English and French guineas, carolins, ducats, and chequins. Of coppers there were English pence and half-pence and French sous.”

The war cost approximately $135 million to $170 million, excluding amounts expended by foreign governments. Finances became especially desperate, and inflation skyrocketed in 1777 when the Continental dollar collapsed; hence the expression “not worth a continental.”

Many blamed profiteers and speculators. Government price controls were tried. However, as Paine explained, when they tried regulating the price of goods such as salt, “the consequence was that no salt was brought to market.” Price fixing, “reprobated by many and obeyed by few,” proved ineffective.

Washington and fellow Founding Father Caesar Rodney of Delaware blamed army contractors. Rodney called them “as active and wicked as the Devil,” and Washington said he’d like “to hang them all on a gallows higher than Haman.” Thomas Jefferson laid all the blame on the money glut, calling other explanations “nonsensical quackery.”

The soldiers got hit the hardest. With little or no food, supplies or clothes, they were, according to Greene, “naked as the day they were born.” Baron Johann de Kalb said those who had not “tasted the cruelties” felt by soldiers in the war “know not what it is to suffer.” A private complained, “we vent[ed] our spleen at our country … our government … and then ourselves for our imbecility in staying there and starving … for an ungrateful people.”

Finding money was critical, but as a congressional delegate lamented: “one hypothesis has been piled upon another … scheme has been tacked to scheme, and system succeeded system … and finally all [the] pretty … schemes crumbled away.”

Taxes, according to John Adams, were the “radical cure.” To pay them, he urged his wife to sell “my books, or clothes or oxen, or your cows.” However, Congress didn’t have the power to enforce taxes, and most states didn’t have the money to pay them. By 1781, the Massachusetts debt was 11 million pounds; in Virginia, one official wrote, “There is not a shilling in the treasury … nor is it probable there will be.”

Privateering brought in money and goods, but the national government ended up competing against the states. Men who would have otherwise served on naval vessels were enticed to serve instead on more lucrative private ventures.

A national lottery was tried, without much success, again with competition from the states, which had their own lotteries, including two for Loyalist causes. Not surprisingly, the fact that lottery winnings were paid in paper money or certificates stymied ticket sales.

To halt inflation, Congress replaced and revalued at 40:1 the continentals with new state dollars. Many states followed suit, including Pennsylvania, which revalued its currency at 75:1. However, these efforts also proved ineffective.

It was as if a 13-member team, with a different state written on each jersey, blocked every play. Not knowing what else to do, Congress punted - it printed more money. By printing reams and reams of paper, they shanked the punt.

In the war’s first three years, $38 million had been printed. In 1778 and 1779, another $188 million was printed, making it such a worthless glut of paper that even soldiers tried to refuse to take continentals on those few occasions it was given.

Washington, who noted “a waggon load of money could scarcely buy a waggon-load of provisions,” was left to ponder: “When a rat in the shape of a horse could not be bought for less than 200 pounds, what funds can stand the present expenses of the army?”

By 1781, the continental’s value had declined 97 percent, corn prices increased 1,255 percent in one year, and 4,000 continentals bought $1 in gold. A soldier paid $1,200 for a quart of rum. Samuel Adams spent $2,000 for $20 worth of clothes. Paine bought a pair of socks for $300. A cavalry horse cost $150,000.

Foreign loans were sought, but even that was fraught with competition from the states. John Adams complained that many states had representatives “running all over Europe, asking to borrow money.”

Adams voiced his frustration that seeking loans made him feel like “a man in the midst of the ocean negotiating for his life among a school of sharks.” In the end, trade and a raft of foreign subsidies and loans kept the struggling country afloat in a bloody sea of red ink.

• Paul N. Herbert ([email protected]) writes frequently for the history page.

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